With the proliferation of Artificial Intelligence platforms, Optical Character Recognition software, Natural Language Programming, Big Data, Block Chain systems, Contract Lifecycle Management software and a few other elements in our automation portfolio, are Commercial Management professionals and stakeholders approaching (or already at) a crossroads?
Will the supplier’s automation toolbox be able to review the customer’s boilerplate language and integrate adjustments into the supplier’s financial proposal due to the risk allocation present in the customer’s terms and conditions. Likewise, will the customer’s automation be able to review requested modifications across a set of contractors/suppliers and adjust each contractor’s/supplier’s overall bid package based upon those requested changes?
Frankly, this is an activity which many Commercial Management professionals are currently skimming through or perhaps altogether skipping. Face it, this a very boring task after the hundredth episode! There will likely be some awkward discussions when the proffering party asks, “Why are you pushing back on this provision now? You have allegedly ‘read and reviewed’ the same language a hundred times in the past and have never found this provision unacceptable?”
Moving forward, we anticipate that the commercial management automation tools will be able to calculate “financial equivalents” to certain contractual provisions, or versions of the provisions, and be able to bring that analysis into the negotiation discussion and ultimate decision. For example, the automation will be able to determine the financial equivalent related to the difference between “net 30” and “net 45” and provide the Commercial Manager reliable empirical analysis that the difference represents $X in the subject transaction. This is relatively easy to do using yesterday’s tools. Calculating the financial equivalent between “FOB Origin” and “FOB Destination” is also fairly easy with yesterday’s tools.
But, the tools are improving. Tomorrow’s tools will allow us to calculate the financial equivalent for requested changes to an indemnity clause, to a standard warranty clause and to an attempt of lowering the performance standard from “best efforts” to “reasonable efforts.
The key question is not whether your automation will be ready to do this, but whether the party across the table from you will be ready to do this before you are.